Ferree Wants Congress To Change Satellite Delivery Laws

2/24/2009 10:39 AM Eastern

By: John Eggerton

Former FCC Media Bureau chief Ken Ferree plans to tell Congress that it is time to make some changes to the rules of the road for satellite delivery of local station signals to recognize the "extremely competitive" video delivery market. In testimony prepared for a House hearing on Congress' review of the Satellite Home Viewer Extension and Reauthorization Act, Ferree, who now runs free market think tank the Progress and Freedom Foundation, argues that while competition has burgeoned, vertical integration is on the wane.

He also notes that while the number of cable services has grown from 70 in 1990 to almost 600, the percentage of those channels owned by cable operators has dropped from 53% in 1992 to 10%, calling the free market a competitive success story.One of the changes he wants Congress to make is to allow satellite operators to provide signals from adjacent markets when a Nielsen-designated DMA covers two states. Currently, operators can deliver local TV station network affiliated signals from stations in both states within the DMA, but not adjacent markets in either state. That is because they would be considered distant signals, which can't be imported into a market if viewers can receive a sufficiently strong signal from a local affiliate of the same network.A pair of legislators previously introduced a bill that would have changed the distant-signal rules to accommodate that 47% of split markets.The Television Freedom Act, which was not adopted, was sponsored by Reps. Mike Ross (D-Ark.) and Barbara Cubin (R-Wy.). It would have allowed cable operators to import TV station signals from adjacent DMAs, particularly in areas where those DMAs, cross state lines. One example of a gerrymandered DMA was in Ross' s home state, where some Arkansans in the Memphis, Tenn., DMA can't watch Arkansas Razorback football. "Viewers who reside in a DMA such that their local broadcaster is licensed to a neighboring state should be allowed to receive programming from in-state stations in adjacent markets," Ferree avers.Ferree also argues that any restrictions on important signals are being rendered meaningless by technology, particularly when the cream of those network affiliate shows are available almost immediately after airing online. "As a practical matter, technological innovation will render obsolete many of the restrictions that we accept as necessary to protect marketplace exclusivity within specific geographic regions."Ferree's testimony will come before the House Communications, Technology and Internet Subcommittee, presided over by new chairman Rick Boucher (D-Va.). Boucher has proposed modifying SHVERA in the other direction, putting new requirements that satellite operators carry local stations in all 210 DMAs. Currently, they are not required to carry any local stations, but must carry them all in any market where they carry any, essentially the equivalent of a satellite must-carry regime similar to that for cable.Congress did not impose a similar mandate on satellite because it was a fledgling operation at the time and because local station carriage is a more complicated and difficult proposition for satellites, which is why some smaller markets have yet to get local station satellite coverage. As Ferree points out, "if delivering local television signals in the smallest markets made sound business sense, the satellite companies would be doing so already and no legal mandate would be necessary."